Why Everyone Needs a Financial Safety Net (And How to Start Building It Now)

Saving Money ConceptAn unexpected parking ticket in college was my first big financial slap in the face. When I was visiting a friend, I didn’t realize I had parked in a reserved spot and was left with a big bill to get the boot off my car. It took me months to recover from that sudden expense, even though it was only a couple hundred dollars. I simply wasn’t prepared to deal with any surprises outside of my normal budget.

Often, we rely on some pretty meager savings (if any at all) to cover unexpected expenses. If a real emergency hits, most of us use a credit card to cover the cost, but this can spell disastrous debt as your savings never quite catch up.

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Something as simple as a necessary trip to the ER, or a car problem that happens to occur at just the wrong moment can turn even the most frugal budget upside down. I had many similar experiences with trips to the doctor, and my computer crashing. Everyone in their 20s is going to face unexpected expenses at one point or another. We can’t control the unknown, but we can prepare for it.

Over the past few years, I’ve noticed my definition of financial “emergency” has changed considerably. I rarely come up against budget-wrecking struggles anymore. It’s not because I have been blessed with sudden good fortune, but because I put in the hard work to build a financial safety net.

Everyone should prioritize saving, because everyone will have the need for some extra cash at some point in their life (likely multiple points in their life) to cover those Murphy’s Law moments. It shouldn’t be something you think of as optional; it is crucial to your financial success.

The idea of saving money that will just sit and create security for you can be a hard thing to wrap your head around, but think of it in the same way you would insurance. You pay a little into your emergency fund each month so you will be ready to face a financial challenge with ease.

A good way to start is to spend a month or two ramping up your savings as fast as possible. Aim to save $500-$1000 to get your momentum going. Sell stuff you no longer need, pick up some odd jobs, go on a spending freeze — whatever it is you need to do to get that money rapidly.

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Once you have a solid start to your savings, dig into your monthly budget to figure out what amount you can regularly contribute to your rainy day fund. Ideally you want three to six  months of bare-bones living expenses (rent, cheap food, keeping the lights and water on) saved in the bank. Three months if you have a set income and very stable job, six months if you’re like me and your income changes from month-to-month. It may take some serious time to fully fund your financial safety net, but the feeling of accomplishment and security is well worth the struggle.

Now, I don’t worry if my car needs a major fix, like when my air conditioning went out in the middle of summer. I simply pull from my emergency fund and replace the money as quickly as possible afterwards. My regular budget never misses a beat, and I feel ready to take on the pesky financial challenges life throws at me.

Originally published on October 11, 2016.

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Gemma Hartley is a freelance journalist, speaker, writing coach and the author of "Fed Up: Emotional Labor, Women, and the Way Forward." Her work has appeared in multiple outlets including Marie Claire, The Washington Post, Women's Health, Glamour and many others. She is currently at work on her second book.